Marky Mark to Market

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Managing Director: "Look, if I have to talk to you about being late again your name is going to be at the top of the layoffs list, get it?"
Vice President: "It is 7:22. My calender notice said to meet you at 7:30?"
Managing Director: "What did you just say to me?"
Vice President: "Sorry, it won't happen again."
Managing Director: "Damn right it won't. So, as you know, the bank has announced 'a comprehensive reorganization' to 'achieve greater client focus and connectivity, global product excellence, and clear accountability.' What that really means is that we are firing a metric ass-ton of people and selling a bunch of assets. No one is safe. That is to say, no one at your lowly level is safe. However, people who are team players, who use these difficult days as an opportunity to show their commitment to the bank and excel, to put the bank first, these people will be here in a month. No one else will. This comes straight from the top. Are you following me?"
Vice President: "Yes."
Managing Director: "Ok. I want you to start working on selling some of these 'legacy assets' on this list here to the private equity firms."
Vice President: "Ok... I'll... hey... wait a minute, 'legacy assets'? Most of this stuff isn't even a year old yet. And this stuff is all our garbage."
Managing Director: "When I want your opinion I'll give it to you in a fucking Barney's gift bag. I see they are having an 'I'm in desperate need of a new career' sale. Sounds tailor made for you. Get it? Tailor made. Never mind. If I had Goldman's recruiting team I wouldn't be saddled with these... ok, forget it. I don't expect you to understand. Look, unless you have something to say that's helpful in disposing of these assets in a timely manner without collateral damage, your mouth should be in the 'shut' position."

Vice President: "I understand."
Managing Director: "That's not the fucking 'shut' position, is it?"
Vice President: -silence-
Managing Director: "Good. Now. Start with the big funds. Anyone who claims to be contrarian. Anyone who talks about value investing, that crap. These are the people who are going to fall for the liquidity pitch. Go to KKR. Also try Blackstone, Apollo and TPG. We worked out a fund with KKR back when it looked like the LBO bubble was about to go. Go to them first."
Vice President: "Ok. Hey, you know, I was talking to my friend, he's a Vice President over at Lehman, he said they put together a CDO/CLO structure to dispose of some of their toxic assets."
Managing Director: "Listen rookie, we need to unload more than $12 billion dollars of this stuff. Some CLO structure with $2 billion here and $1.5 billion there just isn't going to cut it. It needs to be on the way out the door by Friday, when we report earnings. And it needs to be a private sale because... what the hell am I explaining this to you for? Think you can handle it or what?"
Vice President: "Well, aren't the private equity shops going to be flooded? I heard Deutsche Bank is selling debt too. Like $20 billion or something, in little pieces."
Managing Director: "You want to work for Deutsche? Cause I'll happily send you on your way. Until then, think about it. What happens if we piecemeal out these instruments?"
Vice President: "We get more for them?"
Managing Director: "I swear I don't know where they find you kids nowadays. No, bottle-service-boy, we can't disguise the price of the worst assets. If we sell it as a big package without a parts analysis the price for any individual instrument class will look like the average if anyone sees it at all. We can dispose of a good bit of the nasty stuff without it biting us in the ass elsewhere on the balance sheet cause of this mark-to-market shit storm we got ourselves into."
Vice President: "What about the $5 billion in equity we were going to get from the Chinese."
Managing Director: "Yeah, that's not happening. After the last drubbing they took in... look, you really don't know when to shut up, do you? You going to take this project on or not?"
Vice President: "Well, but how can KKR buy these things? I mean, is KKR going to foreclose on a loan to KKR?"
Managing Director: "What the hell are you talking about?'
Vice President: "Well, the equity holders in these companies that have taken the loans have to be 'at risk' with respect to the debt holders, and the debt holders have to act like debt holders and demand regular payments and enforce defaults or the IRS will characterize the capital as an equity investment and bounce the deductions on the debt payments that these companies have been filing and..."
Managing Director: "That all sounds like a big, hot sack of 'not my fucking problem.'"
Vice President: "Uh, yes sir."
Managing Director: "So, let's go. Get on it. My tee time is in 90 minutes."
Vice President: "And if they won't go for it?"
Managing Director: "Then tell them you will finance it. Give them 3:1 or so debt:equity."
Vice President: "Finance it? We are going to loan money to a private equity shop to buy loans so that we can get loans off our books?"
Managing Director: "Listen kid, I really don't think you've got what it takes to be a banker or to understand accounting if you don't understand that. But, you know, deep down, I feel sorry for you. Even a limp horse pulls, so I'm going to forget that you said any of that. Now get the fuck out of my office and get to work."

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